A bill in Louisiana that regulates the litigation finance industry was signed into law last week.
The measure (SB 355) bars outside funders from controlling cases in which they invest, including whether to settle, appointing or changing counsel, choosing expert witnesses, and anything related to litigation strategy. The bill also requires parties in lawsuits to disclose funding from “countries of concern” to the state attorney general and makes litigation finance contracts subject to discovery in civil cases.
The legislation, introduced by state Senate majority leader Jeremy P. Stine, was signed by Governor Jeff Landry on June 19 and will become law on August 1. Gov. Landry’s predecessor, Democrat John Bel Edwards, last year vetoed more expansive legislation that would have generally required third-party funding disclosures in civil cases.
This bill is part of a broader movement in several states aiming to restrict the practice of litigation finance, whereby investors fund lawsuits in exchange for a share of the proceeds from successful cases. The US Chamber of Commerce asserts that the $15.2 billion litigation finance industry promotes frivolous lawsuits.
This year alone, multiple states introduced bills with varying success. Indiana passed legislation to prevent foreign entities from funding lawsuits, while West Virginia revised an existing law to include more stringent regulations on litigation finance, such as mandating contract disclosure to consumers and prohibiting the assignment or securitization of contracts. In contrast, proposed bills in Florida and Kansas failed to advance past legislative committees.
For more information, you can read the full article on Bloomberg Law here.